Steve Freese
President and CEO
This month we continue our discussion, taking a realistic look at how to move forward to meet the goals of carbon-pollution-free and/or fossil-fuel-free electricity production in the future.
According to the U.S. Energy Information Administration, nationally in 2020, natural gas was the leading source of fuel used to produce electricity at 40 percent, nuclear power and renewables were at 20 percent each, followed by coal at 19 percent.
In the Wisconsin cooperative family, we are actually ahead of the game when it comes to renewable power, which provides 24 percent of our fuel. Still, we are much more reliant on coal at 70 percent and natural gas at 6 percent. (Unlike other parts of the country, natural gas is still the primary source of fuel for home heating in Wisconsin, which takes precedence over energy production).
What is baseload?
Baseload is the amount of electricity that is consistently used every day. Our refrigerators, water heaters, home heating systems, televisions, toasters, coffee makers, computers, lighting, manufacturing equipment, and dairy barn cooling systems all need to have electricity to run, along with many other items we take for granted in our daily lives. No matter what, we have to produce this much electricity to meet members’ needs every day. It has to be consistent and ready on demand, so baseload requires an energy source that is consistent and reliable.
Intermittent energy sources, like wind and solar, are low cost. Still, they are not optimal for baseload reliability because the sun does not always shine, and the wind does not always blow. Natural gas can be ramped up quickly to meet members’ needs and is available 24 hours a day, 7 days a week. Coal, nuclear, and natural gas are the three fuels used primarily for baseload electricity needs.
Looking at the data from some of our member cooperatives, almost 900 megawatts of coal and about 75 megawatts of natural-gas-produced electricity will have to be replaced to achieve the Biden administration’s goal of 100 percent carbon pollution-free electricity by 2035.
We are already at 305 megawatts of wind, solar, and other renewables, which accounts for 24 percent of the renewable fuel mix used by most of Wisconsin’s electric cooperatives. Even with that high percentage of renewable energy, we have a long way to go in Wisconsin and the nation to achieve the proposed 2035 goal of carbon pollution-free fuels used for electricity production.
What is a stranded asset?
The cooperatives in our data set would have to retire almost 1,000 megawatts by 2035. Depending on the year they were built, some plants may not be fully paid for by then, creating what we call a “stranded asset,” which is something you pay for even though it’s no longer in use. A power plant can cost $700 million to build and may take 30-50 years to pay off. To ensure reliability for all members, as we transition to more renewable energy and lower carbon-emitting fuel sources, there will certainly be fossil fuel plants that will not be paid for by 2035.
When you have to continue paying for a plant that is no longer in use, it can lead to higher energy bills for members, especially since generators also have to fund new plants to replace those that closed to meet new government requirements. It’s a potential double whammy for all consumers. We must consider the lifespan of new and existing plants, so we can plan to retire them on a timeline that makes financial sense.
We will continue this discussion and talk more about how we go about replacing coal and natural gas power plants in the coming months while keeping power reliable, affordable, and accessible for Wisconsin’s electric co-op members.